re: How will banks clean up the $108 Billion hole in their balance sheets?

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currently paying The Fed’s exorbitant rates

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What rates would that be?

Based on history, another bank should fail before end of September.

Maybe banks shouldn’t have funded counterfeit shorting en masse and then act surprised when their tab is due

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What rates would that be?

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Certainly not a rate you are familiar with.

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I read much of this thread and did not see anyone comment on the paltry nature of the $108 billion. The OP reminds me of Austin Powers ransoming the world for one million dollars.

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Can you even imagine what has been leveraged with $108 billion?

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Are you implying our economy is stronger than it has been in many years?

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Do you believe the U.S. economy today is weaker or stronger than it was in 2008/2009 (during the financial crisis) or in 2020/2021 when the economy shut down due to COVID?

I believe the economy is doing much better today than at those time periods. If you disagree, let's hear your reasoning.

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How will banks clean up the $108 Billion hole in their balance sheets?

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Fly the Ukrainian flag at each branch and pass out mini Ukrainian flags and decals to their customers.

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Certainly not a rate you are familiar with.

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Pretty sure he is.

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which is why he is trying to pretend their* is no problem.

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*there, not "their"

What problem are you pretending to see? Be specific. Don't say "there's a whole in banks' balance sheets." I've already determined you don't know what that means.

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I bet he has not ever been able to borrow below prime however.

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I don't borrow, except for using credit cards. And my interest rate on those is 0% because I pay them off every month. In fact, my credit cards pay me cash back every month.

So, you're wrong again, SFB...

I believe the Fed should be disbanded. Anyone who supports the Fed can not be a "good source of knowledge."

The link in the OP is all over the place. Whoever wrote that piece is chasing squirrels.

We had 15+ years of insanely cheap money. The value of any long term debt issued during that time is naturally going to drop. This has nothing to do with Biden and everything to do with a federal government that has funded deficit spending with debt from its central bank.

Deposits are naturally going to chase yield. In this case, MMAs are finally starting to pay decent rates. This shouldn’t be a surprise. The reason you’re seeing 5% 12 month CDs is because banks are trying to keep deposits from running off.

A bigger concern for banking is upcoming CRE (Commercial Real Estate) and commercial loan maturities. These loans are often underwritten by regional and community banks based on 20+ year amortizations with 5+\- year maturities. Basically “balloons.”

So let’s say a $2 million CRE loan was made at 5% fixed for five years based on a 20 year repayment. When that loan comes due, it could be repriced at 8%, increasing the loan payment.

Not only do the rate increases raise the loan payments, but the value of the CRE typically follows rates as well. Like bonds, when rates rise, cap rates typically follow suit, and when cap rates rise, all other factors being equal, CRE values can drop.

So you can have a higher loan payment and require a pay down due to debt service coverage requirements and/or Loan-to-Value requirements.

I’m not calling for the CRE doom that the WSJ wrote about this week, but there will be a correction. We’ll just have to see what it looks like.

That’s on most banks’ radars.